Renewed angst over stock market valuations and worries on where the global economy is headed next will take the air out of speculative stocks. Former fad stocks are getting punished. Given the hostile market conditions, investors should beware of Groupon (NASDAQ:GRPN), Etsy (NASDAQ:ETSY), and GoPro (NASDAQ:GPRO).
Groupon shares are unable to shake the bearish trend. In November, the company reported Q3 revenue falling 7% Y/Y. Unit sales fell 11% to 39.5 million. Traffic is falling, suggesting the company will face a revenue deceleration in the quarters ahead.
Etsy, despite continued strength in its business as witnessed by its Q3 results, faces selling pressure on the stock market. Valuations are now a concern, as markets forgot about the Q3 revenue growth of 41.4% Y/Y to $150.37 million. EPS of $0.15 easily beat consensus by $0.08. But at around 7.5 times sales, Etsy’s momentum may slow if the economy weakens.
GoPro is continuing its bear trend on the markets. After a 24% daily drop on Nov. 2 following its Q3 report, few investors want to touch GPRO stock. At a market cap in the $650 million range, markets signal the camera supplier’s only hope is getting bought out.
Of the fad stocks mentioned, Etsy, despite its valuation, has the best upside potential.
